Low-income pensioners to be spared the franking credit refund crunch?

If you read financial news it would almost been impossible to miss that Labor announced it would remove franking credit refunds from the tax system. This didn’t go down well with the people who get the refunds, particularly pensioners.

It’s understandable why pensioners would feel the most aggrieved as the refund is part of their annual calculation of how much money they have to spend each year in retirement.

Labor’s main target was the very wealthy who get huge refunds from the system, but everyone would have been caught up in this change.

However, in an article in the Fairfax Media Limited’s (ASX: FXJ) AFR it was revealed that Labor will announce an adjustment to the plan.

Low-income pensioners will likely be removed from the plan to remove refunds. The change is expected to include part pensioners and full pensioners at little cost to the budget.

Labor has been encouraged by polling showing there was support for the franking credit change among all demographics including ages, gender, share owners and people earning more than $87,000. Apparently 42% of people supported the policy whilst 35.8% were against it.

Industry Super Australia has recommended that there should be a $1,000 refund cap, with an exemption for all pensioners only costing $238 million in the first year.

A Labor source told the Financial Review “We expect to get a bit of a knock in the polls because of the scare campaign and misinformation. We’re working on ways to protect pensioners. Once that’s done Turnbull will have nowhere to hide. He’ll be left defending tax refunds for millionaires who don’t pay tax.”

Foolish takeaway

This sounds a bit better but if it’s only about pensioners it could still be unfair to on low-income people who heavily rely on the refund as part of their budget.

The best strategy for dividends is to buy shares that are rapidly increasing their income, like this top stock that I own in my portfolio.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.